COURT FILE AND PARTIES
COURT FILE NO.: 15-64907
DATE: 2015/08/14
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: M.T., G.T., I.T. AND V.C., Plaintiffs
AND
Carole Ann Trudeau, Defendant
BEFORE: R. Smith J.
COUNSEL: Ronald F. Caza and Ărik Labelle Eastaugh, Counsel for the Plaintiffs
Andrew Lenz and Joël Dubois, Counsel for the Defendant
HEARD: July 29, 2015
ENDORSEMENT
[1] The plaintiffs brought an exparte motion for a Mareva Injunction to prohibit the defendant from transferring or dealing any of her assets, to pay into Court all of her other liquid assets up to the amount of $1,666,270, and for a confidentiality order as set out in paras. 6 and 7 of the Order of Kane J. dated July 16, 2015. The exparte Mareva Injunction was granted by Kane J. and was returnable to determine if it should continue after the defendant was served and had an opportunity to respond.
[2] The defendant objected to the continuance of the Mareva Injunction but did not object to the continuance of the confidentiality terms set out in paras. 6 and 7 and as a result, I order that paras 6 and 7 of Kane J.âs Order dated July 16, 2015 shall continue in full force and effect.
Test
[3] The test to obtain a Mareva Injunction was set out in Atlas v. Hillier, 2011 ONSC 2277 at para. 46 and is as follows:
To support a Mareva injunction, the plaintiff must first show a strong prima facie case, coupled with a real risk that the defendant will remove assets from the jurisdiction or dissipate those assets to avoid the possibility of a judgment. The balance of convenience must also favour the plaintiff.
[4] In addition, the plaintiff must meet the criteria to obtain an injunction as set out in the case of RJR -- MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311 which includes a requirement to show that the plaintiff will suffer irreparable harm, where damages are not an adequate remedy.
1. Have the Plaintiffs Made Out a Strong Prima Facie Case?
[5] In their Statement of Claim, the plaintiffs allege that the defendant committed fraud, made negligent misrepresentations, has been unjustly enriched and, they claim damages for their inability to make repairs to their farm property as a result of not having the money they paid to the defendant for therapy.
[6] The plaintiffsâ claim for damages is based on the uncontested fact that they have paid the defendant $1,663,270 for therapy provided to them over the past 13 years, commencing in 2003 and continuing until May of 2015.
(a) Allegations of Fraud and Negligent Misrepresentation
[7] The legal test to prove fraud was set out by the Supreme Court of Canada in Hyrniak v. Mauldin 2014 SCC 7, [2014] 1 S.C.R. 87. In order to prove civil fraud, the plaintiffs must prove the that:
(1) A false representation was made by the defendant;
(2) Some level of knowledge by the defendant of the falseness of the representation (knowledge or recklessness);
(3) That the false representations caused the plaintiff to act; and
(4) The plaintiffsâ actions resulted in a loss.
[8] The test to establish a negligent misrepresentation was set out by the Supreme Court in the decision of Queen v. Cognos [1993] 1 S.C.R.87, 1993 146 (SCC). The plaintiff must meet the following five criteria:
(1) A special relationship between the parties;
(2) That the representation in question, must be untrue, inaccurate or misleading;
(3) The representee must have acted negligently in making the misrepresentation;
(4) The plaintiff must have relied, in a reasonable manner, on the misrepresentation; and
(5) The reliance must have been detrimental.
[9] In order to prove fraud or a negligent misrepresentation, it is essential to establish that a false representation was made by the defendant and that the defendant either knew that the representation was false or acted negligently when making the false statement.
[10] In 1997, M.T., attended a conference on alternative medicine in Montreal and met the defendant, after which they then became friends. In 2003, M.T. engaged the defendant to provide her with therapy, initially at the rate of $190 per hour. The defendant increased the hourly rate to $470 per hour in 2005 when she began providing therapy to her husband, Gaetan who operated the farm. She ultimately increased her rate to $650 per hour in 2014. The defendant provided therapy to the plaintiffs over the phone; she instructed thM.T.to calculate the hours spent in therapy and then to double the number of hours to account for her preparation time.
[11] M.T. calculated the hours and prepared the defendantâs invoices for therapy she provided to them once per year. In 2013 and 2014, the defendantâs invoices for the year were $225,000. The plaintiffs paid the defendant the invoiced amount in cash each in each of the past 13 years. The defendant insisted on being paid in cash and instructed the plaintiffs on how to withdraw amounts of cash from the bank that would not draw attention.
[12] M.T. stated in her affidavit that when she first met the defendant, she told her that she was an astrologist, a numerologist, and a medium. The defendant did not represent that she was a duly licenced psychologist in the province of Quebec or represent that she had obtained any degrees from any university, or that she had any other qualifications to provide therapy. The plaintiffs have not presented any evidence to show that the defendant was not an astrologist, numerologist or a medium.
[13] The defendant submits that on the plaintiffs own evidence, she never falsely represented that she was a licenced psychologist or therapist and as a result they have not established a strong prima facie case on which to make finding of fraud or of negligent misrepresentation. I agree with the submission.
[14] I infer that M.T. believed in astrology, numerology or that some individuals were mediums who could predict the future and could have healing powers. There is no evidence that the defendant knew that beliefs in astrology, numerology or mediums were false. It will be difficult for the plaintiffs to prove that a belief in astrology is false. While it is probably not possible to prove that a belief in astrology is true, it will be difficult to prove that such a belief, as with many beliefs that are not supported by scientific evidence, is false.
[15] The defendant also told M.T. that she had healing powers, that she could read peopleâs minds, and could predict the future. The plaintiffs allege that the defendant made other false representations namely that she said she was Pierre Trudeauâs niece and drove an armoured car, that her âtherapyâ guaranteed exceptional results, and that she had a 100% success rate. In addition, the defendant also stated that she had clients in Europe and the United States and had a long waiting list.
[16] The plaintiff states that the defendant presented herself as being well educated, having completed studies in law and medicine and having taken a correspondence course from Berkley. The defendant is alleged to have also stated she abandoned her medical studies because she didnât want to prescribe medications.
[17] M.T. acknowledged that the defendant required her and her husband to consult their doctor and ask him or her whether medical treatments could help them with their psychological problems. Their Doctor advised them that their problems could be cured with medical follow up, psychiatric counselling and medications. However, M.T. stated that the defendant told her that medicine could not provide therapy to assist their daughter.
[18] The essence of the plaintiffs claim is that the defendant controlled their minds and actions through her therapy sessions. Expert evidence would be required to establish that adult plaintiffs, who do not suffer from any mental disability, were totally controlled by the defendant, to such an extent that they could not exercise independent thought, determine if the therapy being provided was of any benefit or if it was worth the amount they were paying for it, or decide to terminate their therapy. The plaintiffs may ultimately be successful at trial but their unsupported allegation that the defendant controlled their minds for 13 years causing them to continue to pay exorbitant amounts for therapy does not constitute prima facie evidence of fraud or a negligent misrepresentation.
[19] The defendant obtained the plaintiffsâ banking information but did not take any funds from their bank account; rather the plaintiffs voluntarily paid the defendant for the undisputed hours of therapy that were provided. In fact, the plaintiff calculated the hours, prepared the invoices, and thanked the defendant for all of her assistance each year over the past 13 years.
[20] To prove fraud, the plaintiffs must show that the defendantâs false representations caused the plaintiffs to pay her over 1.6 million dollars over 13 years. The plaintiffs will have to prove that statements that the therapy of an astrologist, numerologist and medium, guaranteed exceptional results and that she had a 100% success rate were untrue and that it was reasonable for the plaintiffs to rely on such statements. The plaintiffs have not made out a prima facie case on these aspects and evidence must be heard at trial to determine the untruthfulness of the statements and whether the plaintiffs reasonably relied on such statements.
[21] The therapy provided by the defendant may well have been useless or even harmful, but the adult plaintiffs willingly paid for it. They also knew that they were paying for therapy from an astrologist and a medium who told them she could read minds and predict the future. As a result, the plaintiffs did not rely on any false representation or believe that the defendant was a licenced psychologist or psychiatrist. M.T. believed that the alternative therapy offered by the defendant was beneficial to her and her daughter. She continued in this belief over the 13 years as evidenced by her paying the invoices each year.
[22] For there to be a negligent misrepresentation, the plaintiffs must rely on the misrepresentation to their detriment. There is no evidence that the representations that the defendant was Pierre Trudeauâs niece, that she drove an armoured car, that she had taken a correspondence course from Berkley or had done some study of law and medicine were false. Even if these representations were false, the plaintiffs have not made out a strong prima facie case that they reasonably relied on these representations to engage the defendant to provide them with therapy. The plaintiffs knew they were engaging an astrologist and medium who told them she could read minds and predict the future, and not a properly educated and licenced psychologist or psychiatrist.
[23] As a result, for the above reasons, I conclude that the plaintiffs have not made out a strong prima facie case to support their allegation of fraud or negligent misrepresentation.
(b) Allegation of Unjust Enrichment
[24] The Supreme Court in Becker v. Petkus held that to establish an unjust enrichment, the plaintiff must prove the following:
a) An enrichment;
b) A corresponding deprivation; and
c) The absence of any juristic reason for the enrichment.
[25] The absence of a juristic reason for the enrichment is the third criteria to establish unjust enrichment. In this case, the plaintiffs voluntarily paid the invoices for therapy to each year for thirteen years. There is no evidence before me that the plaintiffs suffer from any mental disability. The plaintiffâs voluntary payment of the invoices each year, for the hours of therapy they acknowledge receiving, arguably constitutes a juristic reason for the defendantâs enrichment. As a result, I agree with the defendantâs submission that the plaintiffs have not shown a strong prima facie case that their voluntary payment of the invoices for therapy does not amount to a juristic reason for the enrichment.
(c) Inability to Make Repairs to the Farm because of Payments to the Defendant
[26] The farm is held in the name of a corporation which is not a party to this action. Such a claim would belong to the corporation. As a result, the plaintiffs have not made a strong prima facie case on this issue as it is really a head of damages claimed by a non-party.
(d) Limitation Defence
[27] The defendant submits that the Limitation Act 2002. S.O. 2002, c. 24, Sched. B prevents the plaintiffs from going back beyond a two year period. At a maximum, it would only allow the plaintiffs to claim repayment for the monies they paid the defendant since 2013. The plaintiffs acknowledge that this issue was not raised by them before Kane J. The amount of the plaintiffsâ claim from January 1, 2013, would total approximately $450,000 ($225,000 + $225,000), which is approximately the amount the defendant has undertaken to hold in trust from the sale of her residence in Laval.
[28] The plaintiffs may be able to prove at trail that they only discovered that there was a false representation that they reasonably relied upon in May of 2015. However, I do not find that the plaintiffs have made out a strong prima facie case that the Limitations Act does not limit their claim to the repayment of amounts invoiced and paid for therapy for the past two years.
(e) Balance of Convenience and the Defendantâs Counselâs Undertaking to Hold the Net Proceeds of Sale of her Laval Residence in Trust
[29] The defendantâs residence in Laval is currently listed for sale for $470,000 and I presume it is mortgage free. The defendantâs counsel has undertaken, on behalf of the defendant, to have her Montreal solicitors hold the net proceeds of sale of her Laval residence in trust until further order of this Court or consent of the parties. I infer that this agreement would include an undertaking to refrain from any further mortgaging of the property.
[30] I find this undertaking would adequately protect the plaintiffs in the circumstances and would allow the defendant to continue to pay her living expenses and legal expenses. I find that the balance of convenience favours this approach especially when the limitation defence of two years is a possible limitation on the amount of the plaintiffsâ claim.
(f) Irreparable Harm
[31] The defendant submits that the decision of the Supreme Court in R.J.R. MacDonald stated that a claim for a monetary loss does not usually constitute irreparable harm in private law cases, especially where the plaintiff has not alleged a breach of a fiduciary duty. I do not need to decide this issue in view of my finding that the plaintiffs have failed to make out a prima facie case on the merits of the action.
Risk of Dissipating Assets
[32] The defendant submits that there is no evidence that she will remove any assets from the jurisdiction of Ontario because she resides in Quebec and all her assets are already in Quebec. The defendant further submits that there is only inferential evidence that she will dissipate her assets based on the fact that she insisted on cash payments, she was aware of the amount of withdrawals to make from the bank to avoid suspicion, and her parents reside in the United States. I do not need to decide this issue in view of my finding that the plaintiffs have not made out a strong prima facie case.
Disposition
[33] I therefore order as follows:
(a) the defendantâs undertaking, to have her Montreal solicitor, Irving Mitchell Kalichman, hold the net proceeds of sale of her residence, situated at 1425 de la Matave in Laval, Quebec, in trust, without further mortgaging the residence, is accepted and is ordered to continue in effect until further order of this Court or the consent of all parties.
(b) The defendant is ordered to take all steps to ensure that the net proceeds of sale are paid to the law firm, Irving, Mitchell and Kalichman and held in trust.
(c) The law firm of Irving Mitchell Kalichman is also ordered to hold the net proceeds of sale from the 1425 de la Matave property in trust, until further Order of this Court or the consent of all parties.
(d) The plaintiffsâ motion for the continuation of the Mareva Injunction granted by Kane J. dated July 16, 2015 is denied except for the confidentiality provisions of paras. 6 and 7 which shall continue in force.
Costs
[34] The defendant shall have 10 days to make submissions on costs. The plaintiff shall have 10 days to respond and the defendant shall have 7 days to reply.
Justice Robert J. Smith
Date: August 14, 2015
COURT FILE NO.: 15-64907
DATE: 2015/08/14
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: M.T., G.T., I.T. AND V.C., Plaintiffs
AND
Carole Ann Trudeau, Defendant
COUNSEL: Ronald F. Caza and E. Labelle Eastaugh,
Counsel for the Plaintiffs
Andrew Lenz and Joël Dubois,
Counsel for the Defendant
REASONS FOR Decision
R. Smith J.
Released: August 14, 2015